VCs are backing a not-for-profit foundation developing the DFINITY protocol and will be rewarded in crypto tokens that power the network once it launches.

DFINITY is "building a system that will enable the internet to act as a giant computer."

People can then build applications or companies on this decentralized "cloud 3.0."

LONDON — Polychain Capital and Andreessen Horowitz are investing $61 million into the DFINITY foundation, a Swiss-based not-for-profit developing a new blockchain-powered, decentralised "internet computer."

The investment is the largest ever from Polychain Capital, a San Francisco hedge fund set up in 2016 to invest in blockchain startups. Polychain itself is backed by blue chip venture capital firms including Sequoia Capital, which was an early backer of Apple and Google, and Union Square Ventures, the New York fund set up by renowned VC Fred Wilson which has invested in the likes of Twitter and Etsy.

The DFINITY deal represents the first time Andreessen Horowitz, a well-known Silicon Valley VC firm, has invested in a protocol — in other words, backed the development of a digital process — rather than a company.

"We're building a system that will enable the internet to act as a giant computer," said Dom Williams, DFINITY's president and chief scientist. "It will be an open protocol, it won't be supported by a company, it will be supported by whoever connects their computers to that protocol."

Williams told Business Insider that both Polychain and Andreessen Horowitz will receive a certain amount of DFINITY crypto tokens once the network fully launches. These tokens will power the decentralized "internet computer" and will also be given as rewards to computers that hook up to the network and provide "mining" power.

"Andreessen is making a bet that the internet computer will be a popular thing and the demand for these tokens will drive their value up," Williams said.

DFINITY explained

The DFINITY project traces its roots back to a 2014 project to make a fast cryptocurrency and uses many of the same cryptographic and blockchain principles that underpin leading digital currencies.

DFINITY's next-generation technology will allow applications and companies to be built on a decentralized "cloud 3.0," Williams said, which is made up of a network of computers connected over the internet.

Dom Williams, DFINITY. DFINITY "This internet computer is interesting for a number of reasons. First of all, it can act as a cloud that can host traditional business systems and it will provide an alternative to hosting your business on Amazon or Google Cloud or Microsoft Azure.

"It will provide a different kind of technology stack. The total cost of ownership of these business systems will be dramatically lower.

"The internet computer isn't free, but you won't have a dependency on a company, you'll be on an open network. But most importantly it will cost you less to create your business system on the internet computer and it will cost you less to develop and maintain it."

Because data and processes won't be centralized, applications built on DFINITY's network should be less vulnerable to threats such as Edward Snowden-style leaks or the Equifax hack, Williams said.

"The systems you develop will be more reliable, more secure, and actually be able to safeguard the privacy of your data."

As well as businesses, Williams envisions decentralised applications built on the DFINITY network — a decentralised Dropbox or Uber, for example, not controlled by any one company or entity.

Ryan Zurer, Venture Partner at Polychain, said: "The Dfinity team is truly exceptional. What Dfinity is building represents one of the most important technological innovations that we have ever seen since the very creation of the blockchain."

'NASA for decentralisation'

The $61 million raised from Polychain and Andreessen Horowitz takes the total funding raised by the DFINITY foundation to over $100 million.

That latest funding will be used to help set up the DFINITY Ecosystem Fund, which will "support technical teams building applications, tools, and protocols for deployment on DFINITY."

Williams, who splits his time between Silicon Valley and Switzerland, told BI that some of the money will also go towards building a "NASA for decentralisation."

"We believe ultimately that if you're going to have millions of businesses hosted on the internet computer, you're going to need a team of thousands of people who are constantly analysing the performance of the computer and looking for security threats," he said.

DFINITY hopes to have a beta version of its network up and running later this year, Williams said.